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NorthStar Realty Finance Corp. Message Board

  • dar200 dar200 May 31, 2013 1:23 PM Flag

    It ain't over

    Shorts are having a ball (although most are still underwater) and are in no hurry to cover until the selling stops. Where and when it stops, only the sellers know. Fear is a stronger motivator than greed. Lemmings do what lemmings do, rational reasoning notwithstanding. That's the way it is.

    I have the will and ability to wait it out. The CAD numbers will speak for themselves, as will the dividend.
    Don't like the selloff as it's much more fun to watch new 52-week highs, but I pay my bills with dividends, not the price of the stock.

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    • Couldn't help myself. When the yield hit 9% ($8.44), I added more NRF to my position. I'll just hold and if the yield gets to 9.25% ($8.21), I'll add still more.

      • 1 Reply to lurking_in_the_distance
      • Lurk is on the right track in suggesting that a healthy dividend yield provides the best downside protection. For those that may be interested, NRF has historically traded to an approximate 10% current dividend yield, excluding 2008 and 2009 when the yield was much higher. But in normal years this stock has traded about 10%. Some simple math tells you this stock got way ahead of itself at $10, and is now reverting to where it's traded much of the time. Which was a 10.9% yield in 2010, 9.9% yield in 2011 and 10.8% yield in 2012 (9.9% in 2006 as well). Assuming we get a $0.20 dividend payment in August, that suggests $8 or so is a safe entry area (or attractive exit if you're short).

        Regarding interest rate sensitivity, NRF has put in place LTD at the asset level that's not going to reprice anytime soon. Similarly, parent-level leverage (converts, TRUPs, preferreds) is long dated and coupons are already rich. So CAD shouldn't be affected by bond-market jitters over QE withdrawal. But when markets get bumpy, trading multiples revert to the lowest common denominator, and for NRF that's been a 10 yield. Of course, this time it may be different and NRF's current profile and opportunity set may warrant a lower dividend yield given reasonable growth expectations. We'll see who's right next week.

16.84-0.06(-0.36%)Jul 25 4:04 PMEDT

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